Why annual performance reviews suck

Published: December 20th, 2010

The dreaded end-of-year performance reviews will soon die a slow and painful death.

And I’m not the only one who thinks so.

Management expert and author Aubrey Daniels recently sent me a pitch about why organizations should ditch the annual review and replace it with behavioural methods that compel employees to stay productive all year long. Daniels advocates for a “pay-for-performance system,” which he said will ensure that individuals are compensated based on their performance related to specific business goals.

“Typically the same improvement plans appear in the performance appraisal every year. That shows either people are not taking it seriously, or they’re not making improvements,” Daniels said. “It’s a system that’s broken, and they’ve been tweaking it for more than 50 years. At some point, you’ve got to say tweaking is not going to work because you’re tweaking something that’s broken. Major changes have to be made.”

The e-mail from Daniels reminded me of a story I wrote recently on a Toronto-based enterprise software firm called Rypple. The company’s flagship business-focused, social networking suite is aimed at letting HR and business managers easily collaborate with their employees year round.

With the product, managers can coach, provide feedback and share ideas with their staff within a Web 2.0-like interface. For example, a manager can set a project goal for a particular employee, offer and accept feedback from the employee on the goal, and publicly acknowledge the employee if things are going well.

And this isn’t even something I think IT shops have to buy. Any product that lets users regularly collaborate and track their work would do just fine. I could even see this working in Google Docs for smaller organizations who might want to try this out on the cheap.

By collaborating throughout the year on project goals, performance reviews become an ongoing process that is actually integrated into the workflow.



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